Most Democratic strongholds are bankrupt
The recent flurry of cities declaring Chapter 9 bankruptcy shouldn’t be startling news. After all, the U.S. itself is bankrupt. Even the International Monetary Fund has effectively declared America bankrupt. So has our very own Congressional Budget Office.
One segment of the Democratic coalition which benefits from the endless number of social programs – food stamps, welfare etc. couldn’t care less. But public sector unions are probably the core of the President’s coalition because these were his roots when a street organizer, and that’s where the hefty campaign contributions are.
The municipal Democratic strongholds are a predictable reflection of their spendthrift national Democratic leadership. (Like father, like son.) San Bernardino became the third California city to declare bankruptcy, but it won’t be the last. They were followed by Scranton, Pa. And Detroit, another Democratic stronghold, already had its general obligation bonds rated as junk last summer. Providence, R.I., is hanging on by its fingernails. Central falls, R.I., filed for bankruptcy in August 2011 – and the beat goes on.
Other mayors around the country are paying attention regardless of party affiliation – and they’re all thinking the same thing: Let’s do it.
By declaring bankruptcy they will jump-start fundamental fiscal reform – particularly the legacy costs of public sector union retirees. (Chapter 9 essentially provides for reorganization with the federal bankruptcy judge, an officer of the U.S. Federal District court, calling the shots, not the unions.)
The lack of funding levels for these benefits is disgraceful. The Kellogg School of Management calculates a stunning $4 trillion shortfall between the benefits promised to public sector retirees and just how much funding will be available.
The irony may be self-evident, but it would be poetic justice for Mitt Romney to take a page from Barack Obama’s playbook and hammer home the need to “fundamentally transform America” – but this time back to a constitutional federal republic – and as quickly as possible. The economic fallout from the policies and the destructive identity politics of President Obama have both polarized the country and put it in economic free-fall. The liberal progressive philosophy of the left-wing of the Democratic Party has rapidly permeated our social fabric, and nowhere is more evident than at the municipal level.
Some California towns are considering using eminent domain to restructure underwater mortgages to market value. But eminent domain was designed to serve a public purpose. This scheme was devised by an Obama supporter who was a former California state treasurer, and Chair of Obama’s Financial Crisis Inquiry Commission, whose company would collect a fee on every deal.
A thorough analysis of the negative effects of this scheme goes beyond the scope of this column, but it clearly displays liberal progressive thinking at its worst as they troll for votes; and the desperation of cities now paying a steep price for pandering to their union constituencies ever since public sector unions were given the green light to organize. (Wisconsin was the first state to permit collective bargaining by government employees in 1959.)
Many mayors and governors have stopped pandering for union votes; opting instead for fiscal sanity. Not the President. Obama also has – by presidential fiat – redefined welfare to work reform to mean anything to get the welfare vote. He has legalized close to a million illegals to get the Latino vote, and has pushed food stamp commercials and parties for the food stamp vote. And the list goes on. His re-election strategy means more government spending, and sadly creates more dependency on government – which is precisely his goal. And Obama is ahead in the polls.
Many mayors, on the other hand, now realize that cities must live within the means of its taxpayers.
How many times have failing organizations of any kind said, “Let’s go back to the basics” – the principles that made us successful in the first place. To really go back we’d have to revisit 17th century John Locke of the English school of “Common Sense” who had a profound influence on the Framers and whose words can be found in the Declaration of Independence.
As a firm believer in individualism and a limited government whose political power “derives solely from the consent of the governed,” he believed the reason men “put themselves “under government” is the need for the preservation of their private property. This is underscored in Federalist No. 10 where James Madison writes that the protection of property rights as being “the first object of government.”
While out of control federal spending is being hotly debated these days, let’s not forget our municipalities. By comparison, while social entitlement programs – not unions – are bankrupting the federal government – at the municipal level the other is true. Virtually all mayors agree.
It is remarkable how we have drifted from classic “liberal” limited government whose purpose was to protect property, and let citizens rely on their “own strength,” to where we are now, where public sector unions dictate to local government. (How limited can a city government be with 36,000 employees? (Chicago.)
President Franklin Roosevelt himself told union bosses, “The very nature and purposes of government make it impossible for [government] officials to bind the employer…because the employer is the whole people.” The naivety of his reasoning was obvious. He thought all the people are the employer. Wrong. It is government – and they bid for labor’s vote.
We’ve all heard the horror stories, such as one third of Long Island’s police officers retiring on disability pensions in their 30s and 40s at three quarters of their salary – called the disability lottery in police parlance. But also the indirect costs of unions, like in Gainesville, which, according to one city official, pays for a full-time labor relations director, a staff assistant, a city attorney skilled in labor relations issues, and occasionally outside counsel.
Think of this: Without a union, Gainesville could hire more officers to protect their citizens. But then the police wouldn’t have a union to protect themselves from the taxpayer.
Roosevelt and Locke were in agreement on one point. Government exists not from the right of any particular group; or as FDR said, “The process of collective bargaining… cannot be transplanted into the public service.”